Productivity Analysis of Central Public Sector Enterprises with special reference to 10 CPSEs

Abstract::

After independence, it was a favour duty of government for economic development by adopting a process which took the economy towards a developed stage. A mixed economy, purview gave public sector a dominant role to play. Government policy and the global environment put a great pressure on industrial sector to increase productivity with efficient and effective performance. Thus with the background of colonial rule, India march towards socio-economic set up, gave a higher responsibility to function with high accountability and undertook social responsibility.

Key words:Total Factors Productivity CPSEs, Impact on Indian Economy

1. Introduction ::

Since planning as a process for development, public sector has come to a dominant position in the economic scene. The government departments till 1947, discharged the low and order function, but they had no instrumental experience of running industrial and economic enterprises. Public sectors afterwards became a tool with some modifications for bringing desired economic goal. Thus public sector became the chosen instrument for achieving greater production and proper distribution.

2. Industrial Policy 1956 and thereafter ::

The industrial policy resolutions showed the path of which public sector was to stat and develop (i) basic industries (ii) strategically important (iii) infrastructural facilities and (iv) public utility services. Many of such industries had a massive capital investment and had a long gestation period. There were the core industries and were beyond the capacity of private sector. The mission two, of public sector was not profit maximization but was to achieve balanced developed to curtail private monopoly be useful to the society in terms of social considerations as a whole and look after the requirements of the defence. This does not mean that profits should expect, as profit it is a measure for better performance and efficiency.

3. Importance and why selection of this topic ::

This paper focuses on the Central Public Sector Enterprises having been decorated by the centre with the world Navratna due to the following aspects.

1. Enormous size
   Its size is not only due to financial operations – but they turn out diversity of output of goods and services and controls activities in areas like, fuel, electricity, petroleum, coal, metals, fertilizers, electronic equipment, communications, IT, gas, etc. and even bread and milk and in other enclosed fields.
2. Phenomenal growth
   Massive capital investment made the number of personnel employed turnover and support to the government exchequer is huge and the strategic nature of the products and services – talks the public sector in the key position.
3. Model employer
   Public sector is expected to be just and fair to its employers. The employee may not be model one – public sector has also to support under privileged section in the matter of recruitments etc. and with the better return be accountable and socially responsible, both, production wise and productivity wise, pricewise and support-wise take up sick units, takeover the sick textiles mills in Ahmedabad.
   Profitability may be distorted by factors beyond the control of managements dumping more constraints on the public sector. Therefore profitability may not be good parameter for judging performance of the public sector.
   It becomes necessary to find out some other way to judge the performance of this sector. “A study of productivity of public sector units becomes relevant”. It is the duty of every respective enterprise’s management with the given constraints affecting the unit, to improve its productivity and make continuous efforts to monitor and improve it.
4. Performance of Public sector
   Public sector has come under criticism in all forums viz. social as well media in general. The operational decisions are based on considerations then commercial. A plant in a backward area lacks required infrastructure. This increases the project and operating costs. But there are social economic benefits to the area as a result of location of a unit – but this is not slated in the balance sheet of the enterprise. Similar is the case in terms of price of its products wherein strategic items might be subsidized – gas, petrol, etc. This would help the pocket of the consumers – or other firms using such products as inputs. This all is not reflected in their balance sheets.
5. Cumulative effect
   The productivity of any commercial unit, private sector or in public sector is the cumulative effect of the productivity of number of inputs and services in the production process. Thus in the manufacturing unit, there are inputs like materials, labour, capital, overheads, etc. This is also known as partial productivity – with different inputs being focused of the respective productivity.
6. Inventory and Inventory control
   Inventory is the vital area for the materials put on process use. Raw materials, stores and spares are purchased, stored and issued to the respective department at the needed time by the material department. Thus purchased, stored, issued at the right time effects productivity. Thus it becomes necessary for material’s department to have inventory control. Storing the needed stock in terms of quantity and quality it would not have to face a larger financial impact. For this just in time purchases of inputs and other stores for the plant is the best way for curtailing the expenditure on the output produced. Therefore time, prices of materials, their supply and trend of domestic and international markets, along with the government policies, expectation of changes should be worked out.